It's okay to spend a little to live a little.

My annual review is happening on Wednesday, during which I will sit down with my boss, get feedback on my performance this past year, and learn if I will receive a bonus and/or raise (hoping for the “and”). During the financial crisis, I remember coming across several articles about Wall Street bankers freaking out because their annual bonuses were going to be less than what they were expecting. As someone who will never be at the receiving end of a $2 million bonus, I felt very little sympathy. The articles detailed how the bankers were dependent on the bonuses to keep up their lifestyles: something had to pay for private schools, the three vacation homes, the Maserati in the garage. The bonus was an annual windfall that would allow them to pay for these expenses.

In a way, I relate to these Wall Street types in that I have been basically been thinking about my potential bonus for the last 6 months, wondering how much I would receive and whether it would be enough to cover some pressing expenses: 1) my credit card balance and 2) the upcoming expenses I’ll incur for three weddings next year (airfare, bachelorette parties, bridesmaid dresses, gifts, etc). I developed some complacency about quickly paying down my credit card: “Oh, well, I’ll pay a little bit more than the minimum now and I’ll just wait for my bonus to completely pay everything off.” Starting to save for the 2015 wedding expenses: “Oh, well, I’ll throw a couple bucks here and there into a savings account and then dump a huge chunk of money in there when I get my bonus.” But what if I don’t get a bonus? Or I do get one, but it’s not the amount I’m hoping for? Then what? Is that the kick in the butt I need to finally make some real changes? Knowing that there may be a windfall is making me lazy, in a way. I shouldn’t be using a bonus to pay off already-incurred expenses. I want to use it to pay off a big chunk of my student loans and maybe have a little left over to treat myself.

I’m sitting at our dining table in our tiny apartment in Brooklyn and feeling pretty thankful. I like what I see: natural light pouring through the windows and skylight, house plants looking healthy and green and alive, a new kitchen. I like what I hear: nothing, except for the occasional truck driving down the street. No neighbors walking around upstairs or banging doors or clomping up and down the stairs. I’m getting what I paid for.

Lots of the personal finance blogs out there on the Internet advocate for reducing the cost of your housing to the extent possible. After living in a cheap place my first year of graduate school, I know that that’s not always the best thing. During my first year of grad school, I lived in an apartment in West Philadelphia for $475/month. It was cheap and 20 minutes away from school but still felt a little sketchy at night. About 6 months into the lease, my apartment was robbed while I was asleep in my room. The burglar and I equally freaked out when we saw each other and he ran out. Luckily I was not hurt but my sense of security was shattered. I moved out immediately the next day and ever since then, have been happy to pay more money just to feel safe again.

Dennis and I pay $2375/month for a 500 SF one-bedroom apartment in Park Slope. Sidenote: I’m totally okay with sharing how much I pay in rent with strangers now, after having lived here for over a year. It’s the next question people ask after, “What neighborhood do you live in?” Everyone in NYC suffers from overpriced housing. Anyway, this is a little pricey for the neighborhood. A half-mile to a mile away in either direction, our rent would probably go down by $300ish/month. But, here is what our rent buys us:

A top floor apartment in a renovated brownstone. This means we get a ton of light and no neighbors stomping around above our heads at all hours of the day.

A renovated apartment. We have a brand new kitchen and bathroom, thanks to a landlord who actually understands that you need to invest in and update your units as long-term tenants move out.

An actual hop, skip, and a jump across the street to Prospect Park, Brooklyn’s version of Central Park. Being able to call the park our backyard is amazing. We can take walks, go running, have a picnic…it’s worth the premium because we do in fact use it all the time.

Space. I refused to look at studios, because I knew I would be living with a med student who would have much later hours than me. I’m also not a fan of having my stove within 5 feet of my bed. So even though our bedroom is tiny, it has 4 walls, a door, and is far away from the stove.

Access to public transit. This is key in NYC, especially if you have to commute to Manhattan for work like I do. A 10 minute walk in any direction will get me to 6 subway lines, 4 of which are express to Manhattan.

A neighborhood we can actually run errands in. We have hardware stores, coffee shops, ice cream parlors, and an awesome farmer’s market.

I hope that this post doesn’t come off as sounding braggy, but I really do love my neighborhood and apartment and am really thankful. For the record, Dennis (and I, for about 3 months) lived in a shitty apartment in Brooklyn before we moved to our current place (think slanted floors, non-insulated windows, cracked tile, mold growing in the bathroom, cockroaches, etc.) so we are positive that our money is being well-spent now.

I turned 28 yesterday and naturally, all I could think about was that in two years I’ll be turning 30. So much for living in the present, right? I’m not afraid of turning 30 like women in their late 20s a few decades ago might have been: I will be totally fine if I’m not married, don’t have a house, don’t have a kids, am not the CEO of my company by then. But, what I am afraid of is heading into that important decade without feeling financially secure. Compared to many of my peers, I am playing catch up because I quit work to go to school; I lost 2 years of income, 401k contributions and matches, etc. That was a conscious decision and I know I wouldn’t be where I am today had I not done that, so no regrets. But, I’m not going to wait till I turn 30 to become financially secure, just like I’m not going to wait until January 1 to begin a resolution. I view 28 as a two-year jumpstart to becoming financially secure and responsible. To me, that means:

No credit card debt. Seriously. Not worth it, even for the miles and cash back.

Significant progress in repaying my student loans. I am not going to torture myself to pay them off by the time I’m 30, but I am aiming for 33, which is five years away. Just the thought of making one less monthly payment (or four years’ less!) makes me salivate.

Not obsessing about money all the time.

This last one is something I’m already working on. I had a lot of free time at work last week so I spent quite a bit of time reading the usual personal finance blogs but also people’s experiences paying off debt. I think I binged because I developed a headache from all the $$$ thoughts swimming around in my mind. What should I be doing to pay off $23,000 in one year like that woman in Idaho did? Do I need to look for a second job? Do I need to convince Dennis to move somewhere totally inconvenient for the both of us so we can each save $200/month in rent? I think my tipping point was when he came home one day and asked how my day was; I responded with, “I found this blog where this guy paid off $90,000 in 10 months!” Which, by the way, is amazing and good for him and I am definitely envious — but the point is that there is more going on in my life than just how much debt I have to pay off.

After that, I let myself have one more money thought and that was it: I have a game plan and it’s simple. Step 1: pay off credit card debt. Step 2: restore minimum emergency savings. Step 3: start contributing a little more towards my loans. That’s it. I’ve already cut corners where I could (we finally cancelled cable!) and I have become a lot better at evaluating whether I really need vs. want something. I’m only using my debit card now so if I have to wait till the next paycheck to buy something, then I’ll just have to wait. That is the best I can do right now and I’m proud of myself for getting to this point…well before I’m 30.

Is it sad that I would do (almost) anything to have student loan debt of $33,000, the national average? I’ve been making payments on my loans for almost a year and it feels like a drop in the bucket that is the size of the Pacific Ocean. It’s easy to get into debt and so damn hard to get out of it. I keep thinking about things I could have done differently while I was in school, so, while I certainly made some wrong choices, perhaps I can give you advice so you avoid some of the mistakes I made.

Tip #1: Start saving for school now

I graduated from college knowing that I wanted to attend graduate school within 3-5 years, but I didn’t save a penny. Three years passed by and I finally felt ready to go back to school, but since I hadn’t saved anything, loans were my only option. I could have put away $100/month for 36 months and ended up with $3,600 for books or airfare or software. Instead, I took out a loan for these incidentals.

Tip #2: Apply for as many grants and scholarships as possible.

I did not do this. At the time I was applying to school, I felt like the chances of me qualifying for something were incredibly slim: I made a decent salary, I did not belong to an oppressed minority group, I did not live in XYZ underrepresented county, etc, etc. I filled out the FAFSA and that was about it, but good things ended up coming out of it. When I got my acceptance letter from Penn, I was surprised to learn that I was to receive an $8,000 annual grant based on merit. Over the course of my first year, I soon learned that many professional organizations also award grants to current graduate students. I learned my lesson this time and applied for an Urban Land Institute (ULI) scholarship for $5,000 – and I got it! I wish I had ignored the negative voice in my head and applied for more scholarships, because who knows what might have happened.

Tip #3: Don’t borrow more than you need

Loans can be used to cover tuition, fees, and living expenses. My parents were generous enough to offer me $1,500 per month while I was in school to cover my living expenses. Without their help, I would be looking at debt closer to $100,000. So thank you, Mom and Pops. I thought it would be a good idea, however, to borrow an additional $5,000 per year as a safety net for living expenses, in addition to the amount I borrowed for tuition and fees. That translates to an extra $10,000 borrowed. Looking back, I wish that I had forced myself to stick to a living budget of $1,500/month. But, I can look at it another way: let’s say I hadn’t borrowed the extra $10,000 and instead, relied on my credit card as a safety net. The interest rate on my credit card is way higher than my loans, so maybe I would have been worse off. Perhaps I should have just made a very detailed budget to see how stretched I would have been with the $1,500/month, and then borrowed accordingly.

Tip #4: Live like a graduate student

I’m not going to say don’t go out to eat or get drinks with your classmates, because you are really going to miss out on bonding opportunities and regret it. So go out (within reason), have fun, and make friends. That said, think about other ways you can keep expenses down: clothing, apartment furnishings, printing, etc. Only buy the required textbooks, and used at that. Do not pay for optional materials like I did! Affordable housing is critical. Luckily, Philadelphia was cheap compared to San Francisco or New York, but I could have been smarter about my choices. My first year, I paid $475/month to split a 2 bedroom apartment with a classmate in an okay, sometimes shady neighborhood in West Philadelphia. My rent was cheap but my apartment got broken into while I was there…so I moved to Center City, which is a lot safer and a whole lot more exciting. I chose to rent a studio apartment for $900/month, which was almost double my previous rent, when I probably should have looked for a roommate situation on Craiglist. Ah, hindsight.

With every change in season comes a desire to refresh and replenish my wardrobe. As spring turned to summer this year, I began to jot down the things I thought I realllly needed:

Sandals: because flats and closed-toe shoes will make my feet smell worse than the Gowanus canal

Dresses for work: because it’s too hot to put on pants

Workout shorts: because I want to multi-task and tan my legs while working out

Tank tops: because sleeves invite sweat

Shorts: because it’s, like, summer?

I did buy a few things, namely, three tank tops, two pairs of shorts, and a pair of sandals in May. And then Spain and a couple of weddings happened and I had to curb all unnecessary spending. This ended up being a blessing because it forced me to dig deep into my closet and make do with what I had for the rest of the summer. Who knew that adding a cardigan or a scarf could end up making some of my more summery dresses appropriate for my office? And the second I spotted my boss wearing open toe, flat sandals to work, bam, I started wearing my own to work. Suddenly my personal wardrobe became adaptable for work. A new pair of workout shorts was high on my list, since my running shorts are a little ragged and nowhere near as cute as those Lululemon ones. But I run at 6:30 a.m., so who cares?

I’m hoping I can carry this mindset with me as we slowly start to transition to fall. This will be difficult because fall clothes are my favorite. It almost makes me want to go straight to winter because everyone looks the same and miserable in their black puffer jackets and boots. Almost.

I spent a good part of the afternoon today clearing out a bookcase in our apartment that has not been touched in a year. I distinctly remember unpacking boxes a year ago, stacking books, papers, and odds and ends into the shelves and thinking to myself, “I’ll organize this tomorrow.” Well, tomorrow finally came…a year later. Most of the stuff was mine: textbooks, readers, notebooks, and old exams from grad school. Instead of growing nostalgic, I grew horrified at the amount of “school supplies and materials” that I bought that weren’t really that necessary in the first place. For example, I had the option to download required readings, but I chose to pay for a printed set. I basically put dollar bills in the recycling bin today. This admission is particularly embarrassing given the sustainability pat on the back I gave myself in my last post. I audited a corporate finance class and made the conscious decision to buy the $200 textbook and $90 financial calculator, even though I wasn’t even enrolled in the class. So. Dumb. I was able to sell the textbook and calculator but still faced a net loss of about $120. Then there was that $90 software training class I took just to put on my resume, the fancy notebooks I thought would make me look smart, the brand-name highlighters…I could go on but I don’t think I will.

Excitement about school supplies is something that has been a part of me since I was a very young child. Who doesn’t get excited about the smell of a fresh notebook and the look of brand new, still pointy crayons? I eagerly awaited the school supplies list that my elementary school issued to families at the beginning of the school year. I counted down the days till my mom could take me to Target so I could check everything off the list. I was usually able to make a convincing argument for needing brand new everything: my lunch bag smells weird, I’m too old for a Lion King backpack, the Lisa Frank notebooks are so much cooler than the plain colored notebooks, etc. I could have been a lawyer. Unfortunately, this didn’t create a good spending mindset and it’s something that carried with me for a long time. It was especially easy when it wasn’t my actual money that I was spending; I was either spending my parents’ money or my loans.

Luckily, I’m done with school forever (unless someone wants to pay for me to get my MBA?) so I don’t think I’ll be buying supplies for a long time. For now, I’m content with swiping notepads from hotels, pens from conventions, and highlighters from the office (kidding).

Cheap. Frugal. Penny pincher. Miserly. Scrooge. The concept of “cheap” seems to have a negative connotation in our society. But then I thought about some of the things I do that might seem cheap on the surface but in actuality, aren’t half bad when you think about it from a sustainability perspective. Could being cheap be good for the environment? For example, I often:

Re-use plastic sandwich baggies. As long as the contents aren’t perishable or wet or sticky, I can re-use a bag for at least a few days to hold dry food like pretzels or popcorn.

Use scrap paper for notepads. I’ve been guilty of sending a 50-page, one-sided document to the office printer and finding mistakes in the text after the fact. Usually the document would go straight to the recycling bin but I remembered that my mom used to cut up similar one-sided documents into quarter-sized sheets, staple them together blank side up and voila: a notepad! It’s nowhere near as cute as those notepads from Paper Source but it’s free and does the job (and reduces the guilt of printing 50 pages for nothing).

Re-wear clothes instead of going directly into the hamper. The sniff test is just as valid as the 5-second rule, people. Obviously, underwear and socks go straight into the hamper (I’m not that cheap!).

Save interesting glass bottles. I’m too cheap to buy a vase for flowers, so I always keep my eye out for interestingly-shaped glass bottles that contain things like pasta sauce, jelly, roasted red peppers, or, if you’re in Europe, water. I was recently in Spain and when you order water at a restaurant, the waiter gives you an individual glass bottle, rather than just a glass of water itself. At one restaurant in particular, the bottle was just too pretty to leave on the table so I stuffed it into my bag when no one was looking (yes, I paid for the water!). Now, not only do I have a vase but I have a great souvenir from Spain!

I guess I could add “Don’t drive” to this list but that’s kind of lame. Who actually wants to drive in New York City?

I can’t write an entry on the 4th of July without using the words “independence” or “freedom” at least once. I was inspired to share what the concept of “financial freedom” means to me after reading this article on DailyWorth. To me, financial freedom means not thinking and worrying about money on a constant basis. I hate having an intensive pros vs. cons debate in my head every time I deliberate a purchase, whether a $40 dress for work or a $4 iced coffee on those days when I feel like I’m suffocating in the NYC humidity. I want to have the freedom to make those little indulgent purchases every now and then without scolding myself for not channeling that money instead towards my loans or credit card debt or savings account. I want the freedom to use boosts in income – whether a raise, bonus, or tax refund – for fun, like a spontaneous weekend trip or a visit to San Francisco just because. Ultimately, it’s this latter concept of freedom that (for the most part) motivates me and persuades me to keep my spending in check.

Has it really been three months since my last post? I wish I had tales of success and triumph to share with you but sadly, that’s not the case. I have consumer credit card debt again. Ouch. An amount of debt that I won’t be able to easily pay back in one (or two…or three) fell swoops. The “life” thing is partly to blame: weddings! Spain! summer clothes! But lack of financial responsibility is also a factor: I’ll just use my credit card to stretch my paycheck!

I know falling off the bandwagon is inevitable, no matter what aspect of your life you’re trying to improve. I beat myself up enough about this in my head that I’m not going to bother doing it in written form here. I have acknowledged my shortcomings and now I am going to give myself a pat on the back for what I have been able to accomplish:

One word I’ve been repeating to myself constantly the last week is “enough”, as in, I have enough. I have the material: a clean and safe home, a kitchen full of food, a closet stuffed with clothes. But I also have what money can’t buy: a loving family, an incredible boyfriend, dear friends. What more could I possibly need?